Contract law and negotiation tactics in Malaysia

What should you know about Malaysian business culture?

Malaysians are extremely polite and courteous in their dealings. They aim to create and maintain a sense of harmony among their business circles. Though they are not known to drive a hard bargain, Malaysian businessmen are experienced and intelligent. Price is an important point of negotiation and most Malaysians can spend time on this aspect before they arrive on the agreed amount.

It’s important to establish a personal bond before proceeding with any business with Malaysian counterparts. Favoured ice breaker topics include family, soccer, your impressions about their country and, of course information about yourself, your business and future plans.

What are the right negotiation tactics in Malaysia?

Given a rich history of trade since the ancient times, Malaysians can be astute business people. The following guidelines can help clinch deals in Malaysia:

  • Offer long-term advantages
  • Build strong relationships based on your reputation and personal rapport
  • Personal relationships and mutually known third parties can he helpful while negotiating
  • Cross-verify claims made by your prospective customers and vet all business inputs received before acting on the information
  • Respect elderly business persons
  • Be ready for slow decision making and provide relevant information patiently when asked for; Malaysians refer to a lot of information before deciding
  • Expect some bargaining and haggling before a deal is concluded

How much is a contract worth in Malaysia?

Any contract made between two parties in Malaysia falls under the Contract Act 1950. Contracts are detailed and precise to avoid any ambiguity. Hence a formal contract is always preferred over an informal agreement.

What are the arbitration and litigation processes in Malaysia?

The laws of Malaysia are based on the Common Law Legal system owing to its colonial past under the British rule. The judicial system in Malaysia is efficient compared to most other Asian countries. Any disputes are resolved within a time frame of about a year. However, legal costs can be substantial.

The Kuala Lumpur Regional centre for arbitration (KLRCA) 2013 arbitration rules form a comprehensive set of rules, in line with international dispute standards, for the quick and cost efficient resolution of international trade disputes. Interim relief can be obtained on an urgent basis with competent and effective arbitrators arriving at decisions quickly, after having taken into account the concerns of all parties concerned.

As mentioned earlier, litigation can work quickly too, but legal fees tend to be on the higher side. In other words, legal representation is professional and expensive in Malaysia.

Malaysia – a fair but competitive market is friendly to international trade. Familiarity with negotiation tactics and knowledge with the contracts of local business environment are the key to your success here.

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